Correlation Between Veidekke ASA and DnB ASA
Can any of the company-specific risk be diversified away by investing in both Veidekke ASA and DnB ASA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Veidekke ASA and DnB ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veidekke ASA and DnB ASA, you can compare the effects of market volatilities on Veidekke ASA and DnB ASA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Veidekke ASA with a short position of DnB ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veidekke ASA and DnB ASA.
Diversification Opportunities for Veidekke ASA and DnB ASA
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Veidekke and DnB is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Veidekke ASA and DnB ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DnB ASA and Veidekke ASA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Veidekke ASA are associated (or correlated) with DnB ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DnB ASA has no effect on the direction of Veidekke ASA i.e., Veidekke ASA and DnB ASA go up and down completely randomly.
Pair Corralation between Veidekke ASA and DnB ASA
Assuming the 90 days trading horizon Veidekke ASA is expected to generate 1.82 times more return on investment than DnB ASA. However, Veidekke ASA is 1.82 times more volatile than DnB ASA. It trades about 0.28 of its potential returns per unit of risk. DnB ASA is currently generating about 0.05 per unit of risk. If you would invest 12,560 in Veidekke ASA on August 28, 2024 and sell it today you would earn a total of 1,080 from holding Veidekke ASA or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veidekke ASA vs. DnB ASA
Performance |
| Timeline |
| Veidekke ASA |
| DnB ASA |
Veidekke ASA and DnB ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veidekke ASA and DnB ASA
The main advantage of trading using opposite Veidekke ASA and DnB ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veidekke ASA position performs unexpectedly, DnB ASA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in DnB ASA will offset losses from the drop in DnB ASA's long position.| Veidekke ASA vs. Eidesvik Offshore ASA | Veidekke ASA vs. Kitron ASA | Veidekke ASA vs. Havila Shipping ASA | Veidekke ASA vs. Elkem ASA |
| DnB ASA vs. Telenor ASA | DnB ASA vs. Storebrand ASA | DnB ASA vs. Orkla ASA | DnB ASA vs. Gjensidige Forsikring ASA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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